As traditional news organizations struggle, nonprofit journalism outlets are playing an increasingly important role. But will the money be there to enable them to go the distance?
By Jodi Enda

On the face of it, the idea is outlandish: Take an aging but well-known musical that’s on stage at a local theater, examine the societal issues it raises and use it as the starting point for a reporting project that people will pay you to produce.

What would have been inconceivable in the second half of the 20th century, when fully staffed newspapers reaped mammoth profits from advertising, is just another creative way to keep journalism alive in a young century plagued by red ink, layoffs and a populace that looks to phones and comedians for news.

As newspapers continue to fold or shrink and journalists lose their jobs by the thousands, the more entrepreneurial in the field have turned to nonprofits as a way to fill the void in news and to keep reporters and editors employed. From the Pulitzer Prize-winning ProPublica to the short-lived Chicago News Cooperative, many dozens of journalism nonprofits have materialized in the past six years, each of them struggling to find just the right formula to stay afloat.

The journalism is the easy part. Supporting it is hard.

The burgeoning world of nonprofits offers journalists the chance to do quality work and to get in on something that is growing, changing and charting a new course. Exciting, sure. But nonprofits also are unpredictable, a result of their heavy reliance on foundations for money, and at times uncomfortable, as they require journalists to enter relationships with funders that in the past would have been taboo.

It is too soon to tell whether nonprofits are the key to journalism’s future. If they are not, perhaps they will serve as a bridge until we get there.

Depending, of course, on the money.

First and foremost, the journalists who run nonprofits learned, they can’t count on advertising.

Just look at newspapers.

Instead, they have turned, hat in hand and pitch on lips, to foundations and rich people. Luckily for journalists, there are a healthy number of foundations, billionaires and millionaires interested in preserving reporting for the greater democratic good or in ensuring that specific issues see the light of day. Some have doled out millions, or even tens of millions, to finance journalism.

But, journalism entrepreneurs have learned, foundations and rich people can be fickle, shifting their priorities from one year to the next. They also are practical. They don’t mind shelling out money to get a nonprofit off the ground but, like the parents of a college graduate, they don’t want to support it indefinitely.

“What foundations don’t want is to be on the hook year after year,” says Rick Edmonds, who analyzes the media business for the Poynter Institute.

So the nonprofits have to diversify. They have to get support from a whole bunch of foundations at once to reduce their reliance on any one benefactor. And they have to look for other ways to bring in money.

That’s where “Dreamgirls” comes in.

When the show was booked for a week this summer at the Muny in St. Louis, an outdoor musical theater that bills itself as America’s oldest and largest, journalists at the St. Louis Beacon saw an opportunity.

“It attracts a diverse audience. It makes you think about all kinds of issues, including race and gender,” says Margaret Freivogel, editor of the online publication. Local donors – individuals and organizations – agreed to underwrite a reporting and video project that focused on issues raised in the three-decade-old musical inspired by groups like Motown’s Supremes.

Endeavors like that one don’t bring in a huge amount of cash – in this case, about $8,000 – but they do show foundations and wealthy donors that nonprofit media outlets like the Beacon have a certain amount of popular appeal and that they are trying to raise money in inventive ways.

“Our core support in the beginning, and still at this point, comes from major donors in St. Louis,” says Freivogel, former Sunday editor of the St. Louis Post-Dispatch, a daily newspaper that announced its latest round of layoffs in late July. Freivogel cofounded the Beacon in 2008 with $500,000 in challenge grant money from former Post-Dispatch owner Emily Rauh Pulitzer. In response to the challenge, the Beacon raised an additional $1.5 million, including $200,000 from William Danforth, chancellor emeritus of Washington University, and major contributions from Beacon board Chairman Richard K. Weil Jr. Later, the Beacon received another $1.25 million from Pulitzer, $1.25 million from the Danforth Foundation and more than $1 million from Weil, a former managing editor of the Post-Dispatch. It also has received support from other foundations for its mission to create “a better St. Louis powered by journalism.”

“Our goal is to diversify the funding sources so that, eventually, we’re not as dependent on major donors as we currently are,” says Freivogel, who oversees a staff of 20 and an annual budget of $1.2 million. “We love the major donors, but you can’t count on people giving you major donations year after year.”

As for foundations, Freivogel says, “I really appreciate what they’re doing, but it’s unrealistic to think they’re going to be able to fund this whole movement.”

For now at least, institutional foundations and rich people, many of whom maintain family foundations, pretty much are funding the whole nonprofit journalism movement.

It is Kevin Davis’ job to figure out how to change that.

Davis is CEO and executive director of the Investigative News Network, a three-year-old consortium of 64 nonprofit, nonpartisan news organizations that produce investigative and public interest journalism, the time-consuming, in-depth work that today’s thinly staffed newsrooms often don’t have the wherewithal to do. He tells me that a survey of nearly a third of INN’s members shows that 70 percent of their money comes from foundations and philanthropists – though he suspects that number is closer to 80 percent for the entire membership. The remaining revenue comes in dribs and drabs from things some nonprofits charge for: membership (7 percent), distribution (10 percent) and a mix of training, events and advertising (13 percent).

“In order for these organizations to be lasting and do permanent good, we need to flip that mix,” Davis says. “The 7 percent needs to eventually change places with the 70 percent.”

Such a seismic shift will require a significant change in the way Americans view news in general and investigative reporting in particular.

“We have a chore ahead of us, a long-term task to make consumers understand the role that we play and get direct support,” Davis says.

Traditionally, several heads of nonprofits remind me, investigative reporting wasn’t expected to attract revenue. Investigative reporters, who spent weeks, months and sometimes years on projects, were the beneficiaries of daily and Sunday newspaper sections or TV segments that garnered lots of paid ads. Those “frivolous” sports and features sections that more “serious” journalists scoffed at? They sustained them.

But now there are entire operations that do nothing except investigative reporting. ProPublica, the Center for Investigative Reporting and the Center for Public Integrity are the largest and best known, but there are many smaller investigative outfits that dot the landscape as well. Foundations are their lifeline now and, according to Davis and several editors, will continue to be for the foreseeable future.

To reduce their dependence on foundations, nonprofits are trying all kinds of things to generate revenue in ways that complement their missions and that are journalistically ethical. The “Dreamgirls” model is just one. The St. Louis Beacon also has sponsored a winter gala, an arts event, a concert and dinner to raise money from givers big and small. The Center for Investigative Reporting – the largest journalism nonprofit in the country with 70 employees – has what appears to be the most aggressive plan to raise money by charging for an ever-growing list of products. The New England Center for Investigative Reporting, based at Boston University, raises about half its money from journalism training programs, content sales and subscriptions to a monthly investigative report, according to its Web site.

The Texas Tribune is well known in the industry for its public events, some of which are underwritten by outside groups and corporations, some of which charge attendees. The second annual Texas Tribune Festival in September is advertised as “a full weekend of debate, discussion and dialogue, featuring some of the biggest names in the world of politics and public policy.” Topping a long list of officeholders, advocates and experts on the program is Gov. Rick Perry, the former Republican presidential candidate. Registration, through the Web site, costs $100.

None of this negates the need for foundations, which remain the backbone of most nonprofits.

“There will be a significant foundation component,” Davis says. “They have to diversify foundations. They have to rotate them because foundations get fatigued. Organizations that have been able to diversify their foundation base have clearer pictures. Organizations that don’t have a good sense of who else will be interested in funding them are in jeopardy.”

In February of this year, 28 months after he founded it, James O’Shea shut down the Chicago News Cooperative.

The experience has left O’Shea, a former managing editor of the Chicago Tribune and editor of the Los Angeles Times, palpably downbeat on the prospects for nonprofit journalism.

“My view is that nonprofits are not the future,” he tells me. “My experience with them was that no matter what your source of philanthropy or donations, the first thing they’re really looking at is can you wean yourself from philanthropy in a short and, I think, unreasonable time. They expect you to develop some kind of revenue source that will make you sustainable because they don’t want to support you forever.

“Eventually, I think that everybody’s going to run into that same problem.”

O’Shea isn’t the only one questioning the sustainability of the nonprofit model.

“My skepticism is that charity is not a business model,” says Edward Wasserman, the Knight Chair in Journalism Ethics at Washington and Lee University in Virginia.

When the recent boom in journalism nonprofits began, the hope was that foundation money would get them off the ground, but that, eventually, readers or viewers would pay enough to sustain them, says Wasserman.

“And I don’t think, for the most part, that has proven to be true.”

Wasserman – who in January is slated to become dean of the Berkeley Graduate School of Journalism at the University of California, pending a faculty vote on tenure – says there is “not a thing” wrong with relying on foundations and philanthropists.

But you have to get them to cough up enough money.

O’Shea, who was editor and CEO of the CNC, is the first to say that he wasn’t prepared for the difficulties of fundraising. He started in late 2009 with a $500,000 grant from the John D. and Catherine T. MacArthur Foundation and a high-profile customer in the New York Times, which paid the CNC to produce two pages of local news twice a week for the paper’s Chicago edition.

That wasn’t enough.

“We started out with maybe $1 million. If we had $3 million to $5 million, we’d still be around,” O’Shea says.

From the start, there were problems. The CNC asked the IRS for federal 501(c)(3) tax-exempt status just before the agency stopped processing applications from nonprofit news outlets. That made it appreciably harder to raise money. The MacArthur Foundation offered additional funds, but O’Shea says there were too many strings.

“I found nonprofits to be a very hard sell for the public,” O’Shea says. “Donating to journalism is a hard sell. They say, ‘Journalism is a business, isn’t it? Why can’t you get money from advertisers?’ As my [board] chairman said to me, ‘You’re not the food pantry. No one’s going to starve if people don’t give you money. You’re competing with things that have a real visceral need.’ ”

O’Shea tried to raise money by launching an election site called Early and Often and charging subscribers a six-month fee of $175 for coverage of Chicago politics. He got 400 subscribers. Another idea, to charge viewers for online profiles of local schools and video interviews with principals, ran out of money before it was up and running.

Finally, O’Shea looked for help from a former rival, the Chicago Sun-Times. In December, a group of local investors, which included most members of the CNC board, bought the paper. O’Shea says he hoped the CNC could become a nonprofit arm of the for-profit newspaper, but that didn’t work out either.

“I decided if we don’t get the affiliation with the Sun-Times, this isn’t sustainable,” he says. “It’s just a crazy world.”

In the old days, journalists did one thing: journalism. We thought little, if at all, about where the money came from that allowed us to do it. We honored and appreciated the (hopefully) rock-solid wall that separated our noble enterprise from the necessary but unsavory business of, well, business. We wanted to keep our hands clean, to avoid owing anybody anything.

As a result, many of us are uncomfortable asking for money.

In 1987, Rick Tulsky was part of a three-person team at the Philadelphia Inquirer that won a Pulitzer Prize for investigative reporting. Six years later, he became managing editor of the Center for Investigative Reporting in Berkeley, California. His was an awkward transition.

“One of the things that caused constant unease was raising money,” Tulsky tells me. Not only did he dislike the hat-in-hand thing, Tulsky says he worried that donors would expect their money to buy specific journalistic outcomes – an obvious violation of the ethics of the trade. “I couldn’t get it out of my head that it felt like, at the Philadelphia Inquirer, going to a car dealer and saying, ‘What stories would you support?’ Which we’d never do.”

After a lengthy return to newspapers – he was a Pulitzer finalist at both the Los Angeles Times and the San Jose Mercury News – Tulsky now finds himself back in the nonprofit world. But this time, he doesn’t have to raise money. Northwestern University does it for him.

Tulsky is the director of Medill Watchdog, a year-old nonprofit that he helped found at Northwestern, in Evanston, Illinois. He and another newspaper veteran, John Sullivan, work with students to produce hard-hitting investigations that uncover problems in public institutions and hold officials accountable. Their organization has partnered with other news outlets, including the Chicago Tribune, Chicago Public Media and the now-defunct Chicago News Cooperative, to gain more visibility for its stories, including a recent exposé about Illinois lawmakers doing double duty as lobbyists – then voting on legislation that helps their clients.

“I love not being responsible for fundraising,” says Tulsky, a friend and former colleague of mine at the Inquirer, “and I love working with the next generation.”

Medill Watchdog is one of 17 university-based centers that do investigative reporting, according to Charles Lewis, one of the biggest names in nonprofit journalism. Lewis left a successful career as an investigative producer for ABC News and CBS’ “60 Minutes” to found the Center for Public Integrity, one of the nation’s oldest nonprofit investigative news organizations, in 1989. He now runs the Investigative Reporting Workshop, which he founded at American University in Washington, D.C.

“We’re trying to instill the values of investigative reporting and make sure it doesn’t become hieroglyphics,” says Lewis, whose organization also brings prominent journalists to the university to work on projects of their own. “We want future generations to love this – and know how to do it – as much as anyone ever did.”

Unlike Tulsky and many other journalists, Lewis says he is not averse to raising money, even as he acknowledges that “it’s not a terrifically pleasant thing to do.” He did it for the Center for Public Integrity – which, on his watch, gained prominence for exposing campaign finance scandals – as well as for a number of other nonprofits that he founded or whose boards he served on in the past quarter century.

He also is a defender of foundation funding. His argument goes like this: There has been an overwhelming amount of carnage in for-profit media, with tens of thousands of journalists losing their jobs. (Erica Smith, formerly the social media editor for the St. Louis Post-Dispatch and now in digital marketing, reports on her Web site Paper Cuts that newspapers laid off or bought out more than 41,300 employees from 2007 through late July of this year. She does not say how many of them were journalists.) Newspapers, in particular, no longer can afford to do what they once could. Something has to step in to fill the void, and that something is nonprofits. Who’s going to pay for them – the advertisers whose dwindling support was at least in part responsible for all those layoffs and who have not shored up news Web sites?

“I think the commercial journalism world has discovered that maybe advertising is not the panacea that it once was seen to be,” Lewis says. “I’m not saying that foundation money is easy or a panacea, either. But right now, what’s the alternative?”

Lewis has raised $35 million to $40 million from foundations and individuals.

“Basically,” Lewis says, “ProPublica was born on third base.”

The vast majority of journalism nonprofits in the United States, he notes, were started by editors and reporters who either lost their jobs or were just plain tired of watching the decimation at newspapers and other for-profit organizations. They had to learn what a business plan was, put one together, donate their time and get others to do the same until they could eke out sufficient startup money from foundations or philanthropists.

In the case of ProPublica, the money came first. Philanthropists Herb and Marion Sandler, who made billions when they sold their Golden West Financial Corp. to Wachovia, wanted to support investigative reporting, the kind that would generate “outrage.” They contacted Paul Steiger, then nearing retirement as managing editor of the Wall Street Journal, who gave them a how-to and agreed to run the outfit. The Sandlers committed up to $10 million annually for three years, and, in 2008, ProPublica was born.

Two years later, it became the first online news organization to win a Pulitzer, for a joint project with the New York Times. The following year, it won another, the first awarded for articles that did not appear in print.

One might assume with all this good fortune – the money, the awards, the respect – that New York-based ProPublica would be the one journalism nonprofit in which people don’t worry about the financial outlook. Not so, says Richard Tofel, the general manager. Like other nonprofits, ProPublica is working to diversify its revenue sources so that, over the years, it will become less and less dependent on the Sandler Foundation. In fact, he says, last year was “a critical milestone” because it was the first in which donations from people other than the Sandlers totaled more – albeit only $35,000 more – than those from the Sandlers themselves. In 2012, Tofel says, the goal is for just 40 percent of the $10 million annual budget to come from the Sandler Foundation, down from 85 percent in 2009.

Attracting money from other foundations and philanthropists requires a concerted effort on the part of Tofel, Steiger and even Herb Sandler. Sandler, who is chairman of the ProPublica board, is not shy about asking other wealthy people for money, Tofel says. (Marion Sandler, who also championed ProPublica, died in June.)

Tofel says ProPublica is seeking to increase contributions from small givers, not only to enlarge its financial base but to demonstrate to large donors that its journalism means something to people. In its first year, the nonprofit had 100 donors. That number grew to 2,600 last year.

The organization, which has its own Web site and partners with other news outlets for increased visibility and impact, also is experimenting with “earned revenue” – basically, charging for things. Last year, the site started taking ads, though Tofel says the income from them is minimal. It also has earned a small amount from eight e-books, which have been downloaded 100,000 times, and from payments from magazines that published its work, he says. Mostly, it gives away its stories, even to large papers like the New York Times and the Washington Post.

“The one other big question mark would be readers,” Tofel says. “It may be over time that things will evolve and money will come from the readers, but we’re not there yet.”

Maybe someday. After all, people used to watch television for free, Tofel reminds me, and now “pretty much everyone thinks nothing of spending $100 a month” for it.

In the last couple of years, many news organizations have begun charging for digital content. “If we got to a point where everyone thought nothing of spending $100 a month on Internet content, ProPublica could get a small slice of that, which would be very meaningful to us,” he muses. But, he adds, “It’s very, very unclear whether we’re heading toward such a world.”

What Tofel and his counterparts at some other nonprofits tell me is that they’d like to get to a place where people – and here, they’re mostly talking about people of means – support nonprofit journalism organizations the way they do their alma maters or their local symphonies or ballets or hospitals.

“What we are trying to do here is to establish a new kind of cultural institution in this country,” Tofel says. “Communities and interests have supported cultural institutions across time very successfully and sustainably.”

Managing Editor Stephen Engelberg puts it this way: “I’ve always said in the long run, I would like to see us be like a very good museum. It charges for people to come in and also raises good money.”

Until that day, however, Tofel expects the vast majority of ProPublica’s money to come from foundations – both institutional and family – and wealthy individuals. The John S. and James L. Knight Foundation, the leading funder of journalism in the country, recently gave ProPublica a $1.9 million, three-year grant, primarily to expand its work in news applications that allow users to find all kinds of information in databases.

ProPublica also has accepted foundation money to cover certain topics, such as the environment, health care or criminal justice, a practice that raises the kinds of ethical questions that used to nag at Tulsky. To be fair, there is no evidence to suggest that ProPublica’s fundraising influences its reporting. Herb Sandler so firmly believes in the wall between the editorial and business operations that he has walked away from reporters who started to tell him about stories they were working on, Engelberg says.

“We need to be constantly aware of the kind of offers people make where they not only fund our work but want to make sure it comes out a certain way,” says Engelberg, a newspaper veteran who will become editor-in-chief and co-CEO when Steiger shifts to executive chairman in January. Tofel will become co-CEO and president. “We have not made any deals where we feel we have to deliver a certain type of story.”

More often, he says, ProPublica’s 18 reporters come up with ideas and, if need be, the business gurus look for donors who will underwrite them.

“If you believe – and we do – that this is at least the immediate future, if not the long-term future, of journalism for the public good, that the free market will not produce the best investigative reporting, then we have to raise the money,” Engelberg says. “If you’re in the public good business, you’d better go to people who have money.”

Bill Buzenberg laid off 19 people in the past year.

The executive director of the Center for Public Integrity ran into financial problems when he essentially tried to do too much all at once.

In 2010, the center embarked on a major new business plan intended to make it competitive in the fast-paced era of apps and tweets. In addition to producing the deep-dive investigative projects for which it was renowned, the Washington, D.C.-based center also would publish smaller investigations every day and add more video, a move to draw viewers – as well as subscribers and advertisers – to a redesigned Web site. The far-reaching plan, aimed at driving up traffic and revenue, proved to be overly ambitious. Fundraising fell as expenses mounted, leaving a budget gap of about $2 million and compelling the center to scale back the plan substantially last December.

“We had our best year in 2010. But 2011 wasn’t our best year,” Buzenberg allows in a phone interview. Three rounds of layoffs and a decision to leave a few positions unfilled reduced his staff from 55 positions to 33.

In a follow-up e-mail, Buzenberg writes that the center has “no apologies to make for being ambitious at a time of tremendous upheaval in the media industry. We were correct to seek additional revenue streams to sustain our investigative journalism. Our work in the public interest has never been more needed nor more widely read. Funding for our work will always be challenging, and that remains true.”

Lewis, the center’s founder and longtime board member, defends the decision to try something new. “If you’re running an organization for profit or not-for-profit and the technologies and news consumption patterns have changed, you have no choice but to be nimble and adaptive,” he tells me. “Frankly, in this warp-speed Internet environment, if you aren’t willing to experiment, and you’re just standing still, you’ll die.

“It’s better to try and not have it work than not to try at all. Is it unfortunate? It is. But people have to take the long view here. The center’s been around 22 years, and whether we had three people or 52 people, you can still do a lot of investigative reporting mischief.”

Although the center had to scrap many of its plans, Buzenberg says he has strengthened his leadership team with some big-name hires, including Executive Editor Ellen Weiss, formerly of NPR. “I feel like I’ve got the best staff in the center’s history and, yes, we’re doing some amazing work,” he says.

Even if the center isn’t attracting as many eyeballs to its Web site as Buzenberg would have liked, it has more readers than ever before, he says. That’s because, in this age of newspaper retrenchment, more of the center’s stories are landing in the mainstream media and on its partners’ Web sites. “Our work is showing up everywhere – major papers, public radio, public television, international newspapers,” he says.

Conversely, he acknowledges, raising money is increasingly difficult. Because of the explosion of nonprofit news organizations in recent years, competition for foundation money is fierce.

Buzenberg says foundations finance about 85 percent of the center’s $8 million annual budget. Individual donors make up most of the rest, with a small amount of money trickling in from advertising, e-books and Kickstarter, a Web site that allows viewers to invest in creative projects. A few dinners hosted by famous people, including former Federal Reserve Chairman Paul Volcker and craigslist founder Craig Newmark, add a bit of luster to the fundraising task.

“I think in the long run, individuals are going to pay for a lot of this work,” Buzenberg predicts. “It’s step by step. There are no shortcuts to this, there’s no quick and easy.”

If you run a journalism nonprofit, you undoubtedly know Eric Newton. As senior adviser to the president of the Knight Foundation, Newton helps direct millions of dollars to media projects and keeps close tabs on the latest trends among nonprofits.

I ask him to talk about what works and what doesn’t. His response: “It’s complicated.”

“There’s no magic model,” he adds.

On the bright side, Newton says, an INN study revealed that the new journalism nonprofits have a higher rate of survival than other nonprofits or startup businesses.

“They’re not dying off, unlike a bunch of people predicted they would,” he says.

Many lessons have emerged since nonprofit news organizations began mushrooming a handful of years ago, Newton says. Not only do nonprofits have to diversify how they raise money, he says, they have to diversify how they spend it. In particular, he says, they have to be careful not to devote too much money to journalism at the expense of business and technology.

“At the beginning, quite a few nonprofit news organizations were driven by one or more journalists who were interested in continuing the journalism,” Newton says. “But you must have business and technology to continue anything. If you don’t have a business person there and a technology person there and you just have journalism people there, it’ll be over.

“In newspapers, editorial was 20 percent of the expense. It’s fairly unrealistic to think you could have even 50 percent of expenses being given over to editorial costs,” Newton says.

Successful nonprofits, he says, hire not only journalists, but business managers, technology experts and sometimes event planners.

Further, they must know their communities and connect with them. “If nonprofit media does not engage the community, it will go the way of commercial media,” Newton says.

Different communities require different types of media, depending in part on what commercial outlets are delivering. “In some communities, no one’s covering schools; in some communities, no one’s covering courts; in some, no one’s covering science or the environment,” Newton notes.

Some communities have local foundations that see the need for nonprofits to fill the yawning gaps left by commercial media, he says. Some have university-based journalism programs, public broadcasting or volunteer-based organizations that will meet the need.

“We don’t know the answers. We don’t know what types of media will emerge in the future. We certainly believe it won’t be the same everywhere. It will be different things in different places,” Newton says. “The trick is meshing the right thing at the right time in the right community.”

YouTube is just the latest voguish venue for the Center for Investigative Reporting, the California-based outfit run by Robert J. Rosenthal.

Under “Rosey,” as he is widely known, the 35-year-old center is growing and changing as never before, with tentacles stretching in all kinds of new and avant-garde directions. The nation’s oldest journalism nonprofit is now the largest and, quite possibly, the most imaginative, especially when it comes to fundraising.

“We are working hard not to think like a nonprofit,” Rosenthal explains. Instead, he strives to identify and even create new opportunities to raise money.

Like everyone else, CIR takes money from foundations and rich people. That accounts for as much as 90 percent of its $10.5 million budget, he says. Unlike most everyone else, the center charges for its work.

That’s right: It doesn’t give it away.

“What we’re trying to do is reduce dependency on philanthropic support and get to where maybe that number is down to 65 percent,” Rosenthal says. “I’m not saying that’s going to happen, but that’s our goal.”

It’s nowhere close to Kevin Davis’ dream that one day nonprofits will collect merely 7 percent of their revenue from foundations. But it would represent a considerable shift in the nonprofit paradigm.

Rosenthal, a former editor of the Philadelphia Inquirer (where he was a colleague of mine) and former managing editor of the San Francisco Chronicle, went to the center in early 2008, when it had seven employees and an annual budget of about $1 million. It had a solid reputation in the journalism world, to a large degree because of pieces it produced with PBS’ “Frontline” and CBS’ “60 Minutes.”

Fresh from running the Chauncey Bailey Project, in which many Bay Area news outlets collaborated to investigate the murder of the editor of the Oakland Post, Rosenthal envisioned a new journalism DNA that involved partnership rather than competition. He began to build what he dubbed a “multi-platform content creator” that would have CIR team up with other outlets to tell the same story to diverse audiences in a variety of ways and through as many kinds of media as possible.

In this model, scoops are a thing of the past. With today’s technology, Rosenthal says, that’s not such a big deal: “I think there is an element of change where everybody realizes now that something’s an exclusive for about 12 seconds – maybe.”

The same investigation could run the same day in any number of places across California and the nation. CIR has syndication agreements with 16 partners, including newspapers, public broadcasters, al Jazeera video and four California ABC affiliates, for which it produces broadcast-quality video. In August, the center entered into an agreement to jointly produce investigative stories with Univision, the nation’s largest Spanish-language television network.

Rosenthal says his partners seldom care if the stories run elsewhere because readers and viewers rarely overlap. Besides, he adds, if a story creates a buzz, they want to be a part of it.

“From my perspective, we’re not a destination Web site. For us to say we have it first and nobody sees it – big friggin’ deal!” Rosenthal says. “Our core mission is to have impact. If nobody hears or sees a story, where’s the impact?”

In an effort to reach more people, the center has tried all sorts of things that journalists customarily don’t do, like producing animation for the Web and designing coloring books that teach children about news. It also is looking to develop mobile news apps and, possibly, games about investigative reporting.

Its latest undertaking is a YouTube channel called The I Files, which launched in August. The center is the curator of editorial content for what it hopes will be “the biggest collection of investigative video from around the country and the world,” Rosenthal says. The channel, started with the help of an $800,000, 18-month grant from the Knight Foundation, will offer a new revenue stream for any organization – be it a newspaper, Web site, a nonprofit or, yes, CIR itself – that produces a popular video, he explains. It also could cultivate a new audience for investigative reporting.

Rosenthal says the arrangement occurred following a serendipitous discussion between CIR’s distribution manager and David Gehring, the news partnerships manager at YouTube, which is owned by Google. “We put together a little PowerPoint and BOOM! BOOM! BOOM! It happened.”

In February, the John D. and Catherine T. MacArthur Foundation recognized CIR for its inventiveness with a MacArthur Award for Creative and Effective Institutions, which came with a $1 million grant for capacity building and sustainability.

Much of the center’s growth came about in 2009, when it launched California Watch, a statewide investigative reporting team. Earlier this year, it expanded again when it subsumed the Bay Citizen, a nonprofit founded two years ago by billionaire Warren Hellman to produce local and investigative stories in the San Francisco Bay area and – like the Chicago News Cooperative – twice-weekly pages for the New York Times. Hellman died in December.

Notably, the Bay Citizen no longer produces pages for the Times, an arrangement that required exclusivity. “Our model,” Rosenthal reiterates, “is to be inclusive.” It is also to grow – in size, in scope and in impact. And that requires more money. Rosenthal says he spends “a hell of a lot of my time” dealing with foundations and forging relationships with philanthropists who “believe in the role of journalism in democracy.”

“I think this is still a very fragile model,” he says.

Rosenthal, like ProPublica’s Tofel and the St. Louis Beacon’s Freivogel, says it’s crucial to have professional fundraisers and various other business types on the staff. But reporters and editors can play a role as well.

“Everybody here really understands that they’re potentially an innovator and an entrepreneur,” Rosenthal says. “The core mission is to grow the audience, have an impact and grow revenue. We’re thinking like a for-profit. When you and I were reporters, no one ever said to us the core thing that is going to sustain us is the quality of our work.”

Right – we had that wall. We might have been accused of writing headlines to sell papers, but it wasn’t, in our minds, to raise money.

“I believe our investigative reporting is not only valuable to society, but it’s going to be valuable financially,” Rosenthal says. “It’s not about profit; it’s not about getting rich. It’s about growing. The thing that will sustain us is high-quality work that really makes a difference.”

Of course, high-quality work has not been enough to sustain the old model. In more lucrative times, newspapers, in particular, were beset by owners and investors demanding ever-higher profit margins. Now many of them struggle to survive in a radically altered news environment.

Nonprofits face a different set of financial challenges. They have to answer to do-gooders and foundations seeking impact rather than corporate boards and shareholders seeking dividends. Their value is measured on a different scale.

For now, at least, their value is rising. Newspapers are shedding journalists; nonprofits are providing a haven, if only for a small percentage of refugees. More important, they are providing the means for journalists to produce significant work.
“In terms of what the organization has been able to do, I think we’re beyond our wildest dreams,” says the St. Louis Beacon’s Freivogel, whom I befriended years ago through a professional organization, Journalism & Women Symposium. “A lot of people thought we wouldn’t last a year and that what we would do would be limited.

“We’re certainly not at a place where we can sit back and relax. We have many challenges. The business model, in particular, is something that, for everybody, is a work in progress. We have to keep experimenting, we have to keep exploring and we have to keep expanding our support. I hope at some point in the future, things are clearer for everybody.”

Until then, the INN’s Davis says he expects there will be more Chicago News Cooperatives – more nonprofits that try and fail – but more successes as well. It is those, the ones that make it, that could serve as models for new ventures, that could put to rest the question of where journalism goes from here.

Senior contributing writer Jodi Enda has written about Politico, changes in campaign coverage in the age of Twitter and Bloomberg News in recent issues of AJR.